Is There Anything Good About Foreclosure?
Investors that specialize in buying existing notes to enhance and grow their monthly cash flow streams might consider a market which sadly, is booming - the foreclosure market. When one market is booming, another market is created. In this case and one you may have interest in is, pre-foreclosure investing. It was announced in May 2010 that a record high of bank repossessions was reached. A staggering 93,777 properties were taken back from homeowners in May, up one-percent from the previous month, April, and up 44% for the same time period last year. However, as gloomy as it may be, there is money to be made as a note investor and possible salvation for some homeowners sitting in the sites of their mortgage holder.
Avoiding a foreclosure can help save the credit rating of homeowners. In this case, although they will lose their home, they can avoid the mark of foreclosure on their credit report if a savvy investor chooses to buy up the property before the evil banker swoops in like a bird of prey and sinks their talons into the homeowners exposed credit rating.
Pre-foreclosure investing is specialized to be sure but also lucrative with discounts as high as thirty percent off market value being obtainable. But first, we need to understand the basics of a foreclosure. Banks and other financial institutions really don’t want to foreclose on property owners, contrary to popular opinion. It’s a loss for them plain and simple. However, since the economy is in shambles, homeowners can’t keep up with their payments, falling further behind each month until the bank has no choice but to foreclose and take the property back.
What this means for you as an investor is money! Banks don’t want these foreclosed properties on their books and are willing to unload them at auction. With pre-foreclosure investing there is short window of opportunity for an investor to take advantage of the opportunity. Once the homeowner defaults on their loan, the clock begins to tick toward repossession which is the ideal time for the investor to make his play.
Fortunately for you as an investor, foreclosures are frequent and rather easily to find given the amount of services available that monitor foreclosures on a day to day basis, listing them each day. If you decide to enter the pre-foreclosure investing market, you need to monitor these publications daily. Once you find a property of interest, the first order of business is to contact the homeowner and make an offer for them to sell you the property.
This may be the most difficult part of the whole process - making contact with the homeowner. Once you make contact, it can be difficult to deal with people that don’t understand the real estate industry on top of the fact they are already stressed and overwhelmed because they are losing their home. However, at this point they have probably accepted the reality of the situation and with you, the investor, offering them the opportunity of avoiding a foreclosure mark on their credit report can make you the hero.
Another thing to consider, you may need to approach and negotiate with any lien holders which they may have placed on the property.
Whatever the case, pre-foreclosure investing in a booming market with readily available profits is nothing more than another income stream for you as cash flow note investor to increase your portfolio.
Notes Cash Flow Income Streams - Unraveling The Mystery
Understanding Notes Cash Flow Income Streams
If you pause and take a few seconds and consider the amount of monetary transactions which take place daily it will boggle the mind. Transactions take place everyday in various forms. A transaction is more than likely taking place at this very second down the street at the local market or gas station. Your next door neighbor may even be involved in a transaction purchasing an item over the Internet. The point being: Some type of transaction is taking place every second of everyday all around the world where goods or services are transferred in exchange for money or something of value to an individual or society as a whole.
This has taken place since the beginning of man and the introduction of the barter system. However, transactions serve different purposes. At the corner market, a transactions takes place between a customer buying an item and the merchant. The merchant receives the item or product from a vendor at which time the merchant marks up the item to make a profit. The difference between what he paid the vendor or supplier and what he sells the product to the customer for is the merchant’s profit, less any additional cost incurred by the merchant. Other cost could include the stock boy he had to pay to place the item on the shelf, electricity, the lease on the building, etc. All these additional cost are factored into each an every item in the merchant’s store to balance out and provide the merchant with a profit at the end of the sales cycle.
But, there are other types of transactions other than the point of sale transaction described above and what this website is all about. This type of transaction is the installment plan. An installment plan is an agreement between two parties, buyer and seller, where the buyer agrees to pay the seller in increments or installments over a set period of time. This time period can vary widely in length on the fulfillment of the agreement, in most cases years. However, the payment schedule is usually based around the thirty day or monthly cycle. The buyer agrees to pay the seller an agreed upon amount set in a contract every 30 days until which time the agreement or contract is fulfilled. This monthly payment is called a note.
New installment plan transactions take place everyday between various parties. Homebuyers and financial institutions. Car dealers and car buyers. Furniture stores and furniture buyers. Vendors and businesses. Even gyms and people buying gym memberships. What many people are not aware of is there is an entire underlying industry that exist where investors buy these installment plans at a discount and in return pay the original seller a lump sum of cash. The investor, in most cases, owns a number of these in his portfolio creating what is called notes cash flow income streams.
When the notes investors buys his first note, he has created an income stream. Each month when the original buyer pays on the installment plan, it now goes directly to the investor rather than the original seller. Notes are bought and sold between original sellers and investors or between note investors all the time. You may be asking yourself, “ Why would the original seller be willing to sell the note to someone else for less than the original value of the transaction?”
The value of the transaction is tied up within the contract between the original seller and the buyer. In effect, the original seller’s money is in many cases tied up for years. It could be decades before the seller sees all of his money. Sometimes the seller does not want to wait years for his money for various reasons which are too numerous to attempt to name. If he decides he doesn’t want wait for his money, he can approach a note broker or a note investor and offer up the transaction for sale.
The reason he must sale the note at a discount is the note investor will be assuming all the risk involved with carrying the note as well as tying up his money for years. The benefit for both parties, the original seller and the note investor, is the seller frees up a discounted amount of cash he had tied up in the contract and the note investor added another notes cash flow income stream to his portfolio. Successful notes investors can and have created monthly income streams of thousands of dollars. Passive income that comes in every month while he pursues other cash flow notes or whatever he chooses to do with his time.
The cash flow notes business is a lucrative business for note investors and can be for note brokers as well. For those willing to apply hard work, discipline, dedication and willing to spend about eighty percent of their time marketing for notes, success is almost a given for creating notes cash flow income streams.
If you pause and take a few seconds and consider the amount of monetary transactions which take place daily it will boggle the mind. Transactions take place everyday in various forms. A transaction is more than likely taking place at this very second down the street at the local market or gas station. Your next door neighbor may even be involved in a transaction purchasing an item over the Internet. The point being: Some type of transaction is taking place every second of everyday all around the world where goods or services are transferred in exchange for money or something of value to an individual or society as a whole.
This has taken place since the beginning of man and the introduction of the barter system. However, transactions serve different purposes. At the corner market, a transactions takes place between a customer buying an item and the merchant. The merchant receives the item or product from a vendor at which time the merchant marks up the item to make a profit. The difference between what he paid the vendor or supplier and what he sells the product to the customer for is the merchant’s profit, less any additional cost incurred by the merchant. Other cost could include the stock boy he had to pay to place the item on the shelf, electricity, the lease on the building, etc. All these additional cost are factored into each an every item in the merchant’s store to balance out and provide the merchant with a profit at the end of the sales cycle.
But, there are other types of transactions other than the point of sale transaction described above and what this website is all about. This type of transaction is the installment plan. An installment plan is an agreement between two parties, buyer and seller, where the buyer agrees to pay the seller in increments or installments over a set period of time. This time period can vary widely in length on the fulfillment of the agreement, in most cases years. However, the payment schedule is usually based around the thirty day or monthly cycle. The buyer agrees to pay the seller an agreed upon amount set in a contract every 30 days until which time the agreement or contract is fulfilled. This monthly payment is called a note.
New installment plan transactions take place everyday between various parties. Homebuyers and financial institutions. Car dealers and car buyers. Furniture stores and furniture buyers. Vendors and businesses. Even gyms and people buying gym memberships. What many people are not aware of is there is an entire underlying industry that exist where investors buy these installment plans at a discount and in return pay the original seller a lump sum of cash. The investor, in most cases, owns a number of these in his portfolio creating what is called notes cash flow income streams.
When the notes investors buys his first note, he has created an income stream. Each month when the original buyer pays on the installment plan, it now goes directly to the investor rather than the original seller. Notes are bought and sold between original sellers and investors or between note investors all the time. You may be asking yourself, “ Why would the original seller be willing to sell the note to someone else for less than the original value of the transaction?”
The value of the transaction is tied up within the contract between the original seller and the buyer. In effect, the original seller’s money is in many cases tied up for years. It could be decades before the seller sees all of his money. Sometimes the seller does not want to wait years for his money for various reasons which are too numerous to attempt to name. If he decides he doesn’t want wait for his money, he can approach a note broker or a note investor and offer up the transaction for sale.
The reason he must sale the note at a discount is the note investor will be assuming all the risk involved with carrying the note as well as tying up his money for years. The benefit for both parties, the original seller and the note investor, is the seller frees up a discounted amount of cash he had tied up in the contract and the note investor added another notes cash flow income stream to his portfolio. Successful notes investors can and have created monthly income streams of thousands of dollars. Passive income that comes in every month while he pursues other cash flow notes or whatever he chooses to do with his time.
The cash flow notes business is a lucrative business for note investors and can be for note brokers as well. For those willing to apply hard work, discipline, dedication and willing to spend about eighty percent of their time marketing for notes, success is almost a given for creating notes cash flow income streams.
Seller Financing - Benefiting Both Ends Of The Mortgage Industry
Solutions And Opportunity With Seller Financing
Whether you are a home buyer or a note broker one of the great aspects of this industry is seller financing. However, let’s cover first things first and explain how seller financing can benefit both a home buyer on one end of the equation and a note investor at the other end.
People that have less than perfect credit know the possibility of acquiring a home mortgage through conventional methods, mainly banks and other financial institutions, is not very good. In fact it is almost impossible, especially in the current economy. Becoming a home owner can seem like an unobtainable dream for many. Financial institutions, for the most part, will only do business with people that have good credit ratings. It all comes down to an individuals number, your credit score. If you’ve ever felt as if you have been reduced to a number, applying for a mortgage is one area where you ARE reduced a number.
Making the effort to improve you credit score is always a good idea and should be an important goal. However, purchasing a home will become a secondary goal and depending on your circumstances and your timeline for purchasing a home, this may not be an option. There is an another option which offers an alternative to doing business with financial institutions - seller financing.
Seller financing or owner will carry is common is probably the only solution for people no established or bad credit. This option is also available to people with no savings to speak of or jobs that are low paying. By seeking out real estate property owners that own multiple rental houses, you may be able work out a seller financing agreement. Very often, property owners with rental properties have grown weary of the rental business and may welcome an opportunity to still collect a monthly note but from someone that is buying rather than renting the property from them. It is a win-win situation for both parties. The person with bad credit or low paying job gets to own a home and the seller still has a cash flow stream coming in on a monthly basis.
On the other side of the equation in terms of seller financing, there is also opportunity for note investors and note brokers to potentially gain a new prospect. Individuals holding owner will carry mortgages many times would welcome the idea of freeing up the cash they have tied up in the property. Lump sum cash is a powerful motivator to many seller financing note holders, even at a discount. If you happen to be a note broker or a cash flow notes investor, these individuals offer an opportunity for you to make some money and add another income stream to your portfolio.
Seller financing is one of the exceptional features of the cash flow notes business as well as the home buying market by providing both opportunity and benefits to a wide variety of individuals. Home buying solutions for those with very little financial means and portfolio growth for note investors as well as commissions for note brokers.
Whether you are a home buyer or a note broker one of the great aspects of this industry is seller financing. However, let’s cover first things first and explain how seller financing can benefit both a home buyer on one end of the equation and a note investor at the other end.
People that have less than perfect credit know the possibility of acquiring a home mortgage through conventional methods, mainly banks and other financial institutions, is not very good. In fact it is almost impossible, especially in the current economy. Becoming a home owner can seem like an unobtainable dream for many. Financial institutions, for the most part, will only do business with people that have good credit ratings. It all comes down to an individuals number, your credit score. If you’ve ever felt as if you have been reduced to a number, applying for a mortgage is one area where you ARE reduced a number.
Making the effort to improve you credit score is always a good idea and should be an important goal. However, purchasing a home will become a secondary goal and depending on your circumstances and your timeline for purchasing a home, this may not be an option. There is an another option which offers an alternative to doing business with financial institutions - seller financing.
Seller financing or owner will carry is common is probably the only solution for people no established or bad credit. This option is also available to people with no savings to speak of or jobs that are low paying. By seeking out real estate property owners that own multiple rental houses, you may be able work out a seller financing agreement. Very often, property owners with rental properties have grown weary of the rental business and may welcome an opportunity to still collect a monthly note but from someone that is buying rather than renting the property from them. It is a win-win situation for both parties. The person with bad credit or low paying job gets to own a home and the seller still has a cash flow stream coming in on a monthly basis.
On the other side of the equation in terms of seller financing, there is also opportunity for note investors and note brokers to potentially gain a new prospect. Individuals holding owner will carry mortgages many times would welcome the idea of freeing up the cash they have tied up in the property. Lump sum cash is a powerful motivator to many seller financing note holders, even at a discount. If you happen to be a note broker or a cash flow notes investor, these individuals offer an opportunity for you to make some money and add another income stream to your portfolio.
Seller financing is one of the exceptional features of the cash flow notes business as well as the home buying market by providing both opportunity and benefits to a wide variety of individuals. Home buying solutions for those with very little financial means and portfolio growth for note investors as well as commissions for note brokers.
Subscribe to:
Posts (Atom)